RingCentral talks $350 million five-year convertible notes to yield 0%-0.5%, up 25%-30%

By Abigail W. Adams

Portland, Me., Feb. 27 – RingCentral Inc. plans to price $350 million of five-year convertible notes after the market close on Wednesday with price talk for a coupon of 0% to 0.5% and an initial conversion premium of 25% to 30%, according to a market source.

Morgan Stanley & Co. LLC, Goldman Sachs & Co., Deutsche Bank Securities Inc. and BofA Merrill Lynch are joint bookrunners for the Rule 144A deal, which carries a greenshoe of $52.5 million.

The notes are non-callable for 2.5 years and then are provisionally callable at a 130% hurdle.

In connection with the offering, RingCentral will enter into capped call transactions with one or more of the initial purchasers of the notes and their affiliates.

The cap price will represent a premium of 90% over the last reported sale price of the common stock from the company’s perspective, according to a company news release.

Proceeds will be used to cover the cost of the call spread, to repurchase up to $35 million of RingCentral’s common stock from institutional investors and for general corporate purposes.

RingCentral is a Belmont, Calif.-based provider of SaaS solutions for business communications.

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